nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2022‒11‒28
five papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale

  1. The fairness of inequality due to risk and effort choices By Maj-Britt Sterba
  2. Connecting the Dots: Loss Aversion, Sybil Attacks, and Welfare Maximization By Yotam Gafni; Moshe Tennenholtz
  3. Judicial Decision-Making. A Survey of the Experimental Evidence By Christoph Engel
  4. Nudging the Nudger: A Field Experiment on the Effect of Performance Feedback to Service Agents on Increasing Organ Donor Registrations By Julian House; Nicola Lacetera; Mario Macis; Nina Mazar
  5. Motivated Skepticism By Jeanne Hagenbach; Charlotte Saucet

  1. By: Maj-Britt Sterba (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Three determining factors for economic inequality are self-chosen effort, self-chosen risk, and external circumstances. The fairness people assign to inequalities due to effort and external circumstances is widely studied. Insights on the fairness of inequalities due to self-chosen effort and self-chosen risk, however, are lacking. I study a novel experimental setting where inequality is due to a choice over effort-provision and a choice over risk-taking. While the resulting inequality is mostly seen as fair, around 10% of third-party redistribution decisions are in line with a fairness norm that only considers the choice over effort.
    Keywords: Inequality, Fairness, Risk-taking
    JEL: C91 D63 D91
    Date: 2022–06–07
  2. By: Yotam Gafni; Moshe Tennenholtz
    Abstract: A celebrated known cognitive bias of individuals is that the pain of losing is psychologically higher than the pleasure of gaining. In robust decision making under uncertainty, this approach is typically associated with the selection of safety (aka security) level strategies. We consider a refined notion, which we term loss aversion, capturing the fact that when comparing two actions an agent should not care about payoffs in situations where they lead to identical payoffs, removing trivial equivalencies. We study the properties of loss aversion, its relations to other robust notions, and illustrate its use in auctions and other settings. Moreover, while loss aversion is a classical cognitive bias on the side of decision makers, the problem of economic design is to maximize social welfare when facing self-motivated participants. In online environments, such as the Web, participants' incentives take a novel form originating from the lack of clear agent identity -- the ability to create Sybil attacks, i.e., the ability of each participant to act using multiple identities. It is well-known that Sybil attacks are a major obstacle for welfare-maximization. Our major result proves that the celebrated VCG mechanism is welfare maximizing when agents are loss-averse, even under Sybil attacks. Altogether, our work shows a successful fundamental synergy between cognitive bias/robustness under uncertainty, economic design, and agents' strategic manipulations in online multi-agent systems.
    Date: 2022–10
  3. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Judges are human beings. Is their behavior therefore subject to the same effects that psy-chology and behavioral economics have documented for convenience samples, like uni-versity students? Does that fact that they decide on behalf of third parties moderate their behavior? In which ways does the need matter to find a solution when the evidence is in-conclusive and contested? How do the multiple institutional safeguards resulting from procedural law, and the ways how the parties use it, affect judicial decision-making? Many of these questions have been put to the experimental test. The paper provides a systemat-ic overview of the rich evidence, points out gaps that still exist, and discusses methodo-logical challenges.
    Keywords: judicial decision-making, bias, heuristic, attitudinal model, ambiguity, parallel constraint satisfaction, public perception
    JEL: K10 K13 K14
    Date: 2022–08–24
  4. By: Julian House; Nicola Lacetera; Mario Macis; Nina Mazar
    Abstract: We conducted a randomized controlled trial involving nearly 700 customer-service representatives (CSRs) in a Canadian government service agency to study whether providing CSRs with performance feedback with or without peer comparison affected their subsequent organ donor registration rates. Despite having no tie to remuneration or promotion, the provision of individual performance feedback three times over one year resulted in a 25% increase in daily signups, compared to otherwise similar encouragement and reminders. Adding benchmark information that compared CSRs performance to average and top peer performance did not further enhance this effect. Registrations increased more among CSRs whose performance was already above average, and there was no negative effect on lower-performing CSRs. A post-intervention survey showed that CSRs found the information included in the treatments helpful and encouraging. However, performance feedback without benchmark information increased perceived pressure to perform.
    Keywords: prosocial behavior, motivation, public service, employee, intermediaries, field experiments, feedback, organ donation
    JEL: C93 D90 I10 J45 M50
    Date: 2022
  5. By: Jeanne Hagenbach (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Charlotte Saucet (UP1 UFR02 - Université Paris 1 Panthéon-Sorbonne - École d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne)
    Abstract: We experimentally study how individuals read strategically-transmitted information when they have preferences over what they will learn. Subjects play disclosure games in which Receivers should interpret messages skeptically. We vary whether the state that Senders communicate about is ego-relevant or neutral for Receivers, and whether skeptical beliefs are aligned or not with what Receivers prefer believing. Skepticism is lower when skeptical beliefs are self-threatening than in neutral settings. When skeptical beliefs are self-serving, skepticism is not enhanced compared to neutral settings. These results demonstrate that individuals' exercise of skepticism depends on the conclusions of skeptical inferences.
    Keywords: Disclosure games,Hard information,Unraveling result,Skepticism,Motivated beliefs
    Date: 2022–07–15

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